The Future of Trade Unions in Japan

1.0 The Decline of Trade Union Density

Trade union density continues to decline in Japan. The unionization
rate fell from 23.2 percent in 1996 to 22.6 percent in 1997. An
overview of unionization rates over the past half century allows four
distinct periods to be identified. The first period, from 1945 to
1949, was characterized by a burst of trade-union organizing
activity. In 1949 the union participation rate reached its postwar
high at 56 percent. From 1950 to 1960, union density then declined to
around 32 percent. The third period between 1961 and 1975 was
characterized by remarkably stable unionization rates, at around 34
percent. The fourth period starting in 1976 saw a further
decline. After the first oil shock in 1974-1975 the Japanese economy
fell into a deep recession, and the union participation rate started
to decline. That decline has continued until today.

The reasons for the decline in union density in Japan after the oil
shock have been discussed by a number of observers. Structural changes
which have resulted in a growing proportion of Japan's employees
being located in tertiary industry can explain only a part of the
decrease in the union participation rate in Japan (Ito and Takeda
1990). Neither an increasing proportion of female and part-time
workers nor a proliferation of management posts is the dominant reason
for the fall in union density. Freeman and Rebick (1989) conclude that
failure to organize workers in newly established firms is the most
important reason for the decline.

Trade unions in Japan are losing their influence over industrial
relations not only because the union density has declined, but also
because many union members are no longer dependent on their trade
union. The unemployment rate exceeded four percent this April. Job
insecurity has come to be perceived as being one of the most serious
problems confronting the Japanese employee. Union members naturally
expect their trade union to protect them from dismissal. At this
moment trade unions still have a voice concerning the job security of
their members. But as the recession becomes deeper, management finds
it increasingly difficult to protect the jobs of their members. Some
union members are skeptical as to whether their union can ensure the
security of their jobs.

Union members began to question the ability of unions in the
mid-1970s, when union density started declining. The majority of large
firms in Japan have a union shop agreement. Union membership within
some period of time after being hired is compulsory and
automatic. Even if members think they get very little benefit from
their union, and want to quit in order to save membership fees, they
are not allowed to do so. Many union members lose their interest in
the union, and look on the membership fee they pay every month as
something like a tax.

2.0 Union Identity Movement

Because unions in Japan's large firms still have their members,
they are financially sound. However, there is a danger that they will
lose the loyalty of their membership. Some enterprise union leaders
are acutely aware of how apathetic their members have become toward
the union. They take the situation very seriously. In order to
reassert the position of unions, many have participated in the union
identity (UI) movement since the late 1970s. Until the first half of
the 1970s, people believed that Japanese workers, especially those in
Japan's large firms, were secure in their employment and that
dismissals before the retirement age were rare. But the first oil
shock and the subsequent recession revealed that even large companies
would dismiss employees in order to survive. Union members expected
their union would protect their jobs, but soon found that the union
would at best only negotiate conditions for their resignations under a
voluntary early retirement scheme. Many union members, especially
younger members, lost interest in union activities for other
reasons. They did not wish to participate in the various kinds of
meetings organized by their union. Most enterprise unions experienced
a drop in the participation of members in union meetings. A
recognition of these kinds of problems and the change in their
members' consciousness was the starting point for those who
devised the union identity movement.

3.0 Background of UI Movement—Three Changes Around Unions

After the first oil shock, three major changes occurred in Japanese
firms. One was in management strategy. During the period of high
economic growth, most Japanese companies were able to expand their
product markets. In the 1960s and the early 1970s people bought one
product after another as they appeared on the market. However, the
first oil shock forced many Japanese to accept that growth does not
continue indefinitely. In addition to the slower growth of the market,
the diversification of consumer demand and the introduction of more
flexible technologies also contributed to the need for management to
rethink the way it structured the workplace. Management came to rely
more on part-time workers, and to restrict its employment of regular
employees. Large firms that had command over an array of subsidiaries
and subcontractors began to develop group-wide personnel management
strategies in order to avoid dismissing employees outright.

A second change was the increase in the proportion of employees in
white-collar occupations. Many of these employees were highly
educated. Until the mid-1970s, it was not so difficult for union
leaders to consolidate the demands of their members. The most pressing
demands were for a wage increase and better working
conditions. Thereafter, however, white-collar union members came to
demand more than the improvement of their working conditions. They
wanted their unions to have a say in various aspects of personnel
management: the transfer of employees from one section to another,
performance evaluation, job assignment, and so on. This made it
difficult for union leaders to work equally for all members. Different
members had come to demand different outcomes from their union.

The third change was in the maturation of industrial relations at the
enterprise level. After the tremendous amount of industrial conflict
in the 1950s and the early 1960s, management and unions tried to
stabilize their relationship. The emphasis shifted from collective
bargaining to the development of joint consultations in which
management and the union could discuss a range of delicate
problems. As the level of mutual trust rose, they began sharing secret
information relevant to the management of the firm. In some companies
the head of the union came to have access to sensitive data otherwise
available only to a few top managers. However, the more delicate the
information became, the more difficult it was for union leaders to
explain the process of negotiation with management to their
members. Union members found it increasingly difficult to understand
transactions with management. It soon become difficult to know what
was being won on their behalf and what was being given away to
management. One result was that union members become more cynical
about the negotiation process. Many lost faith in their leaders and
came also to lose their interest in union activities.

4.0 Four Thrusts of the Union Identity Movement

Activities to promote union identity may be grouped into four
categories: the altering of union symbols, the total welfare policy,
moves to be more actively involved in the firm's decision-making
process, and the organization of non-regular employees.

The alteration of union symbols includes (a) changes to the
union's name (e.g., calling it the XYZ Adventure Club); (b)
changes to the union flag (e.g. redesigning it and using blue rather
than red as the main color); (c) redesigning the union's logo; (d)
using plain words to explain the union instead of the traditional,
ones which often come across as too abstract; and (e) the reform at of
union newspapers, (e.g., using more illustrations and photos).

Table 1 shows how many unions have altered their symbols. These data
were collected though a questionnaire survey organized by Inagami and
his colleagues (1995). In 1993 secretaries from 1,050 enterprise
unions returned the questionnaires (for a response rate of 46.5
percent). Nearly half of the unions were at firms in the manufacturing
industry. Three fourths were at firms with more than 1,000 employees.
Table1

The most popular strategy was to reformulate the union newspaper. The
newspaper is an important means of communication between union leaders
and members. Few union newspapers had previously been
attractive. Their pages were often filled with words. Few had
illustrations or photos. Their overall appearance was rather
bleak. Although they may have provided useful information, members
often threw them away without reading any of the contents. In order to
make union newspapers interesting, union leaders changed editorial
policy. With many illustrations and photos and plain language, union
papers are now much more appealing, and most members read them.

Table 1 also indicates when unions made their changes. One remarkable
point is that about three fourths of unions conducted such reforms in
the past two or three years. Some unions started UI activities at the
end of the 1970s and the beginning of the 1980s. However, the majority
of unions began to undertake these sorts of reforms in recent years.

A second focus of the UI movement has been the development of total
welfare policies. In the past, most trade unions concentrated on
improving conditions within the firm: higher wages, shorter working
hours, and a better work environment. Trade unions sometimes organized
events in which members' families were welcome to participate, but
did not have a clear policy with regard to the members' total
life. The UI movement also attached importance to the life of members
outside their firm. One union came up with a slogan claiming that the
union took care of members and their families 24 hours a day.
Union leaders became aware that the members would increasingly need
the union to be involved in a wider range of activities. Accordingly,
many unions have developed total welfare programs.

The third thrust of the UI movement has been to increase participation
in the firm's decision-making process. Implementation of total
welfare programs require cooperation with management. Without
adjustments at work, it is impossible for members to satisfactorily
restructure their lives away from work. According to Inagami (1995),
56.5 percent of unions that responded keep a voice on management
policies.

A fourth pillar of the UI movement has been the organization of
non-unionized employees. Japan's unions have usually limited their
membership to regular, full-time employees. As long as enterprises
recruited only regular employees, unions were protected by closed shop
agreements, which compel regular employees to be union members. After
the first oil shock, however, management began to employ more
part-time workers who were excluded from most enterprise
unions. Moreover, the number of managers was also increasing. Finally,
employees working in group companies also tended to fall outside the
purview of the union. In order to keep a voice in management, many
trade unions started organizing such workers. Although these efforts
to organize employees have been made only on a limited scale, it is
noteworthy that some enterprise unions have sought to look after
non-unionized employees.

5.0 Results of the UI Movement

It is hard to estimate at this moment whether the UI movement will
succeed in stopping the decline in unionization rates. However, the
preliminary findings of Inagami (1995) indicate that the movement has
been able to reverse the overall decline in the interest of members in
the union movement. When asked whether union members had become more
interested in union activities over the past ten years, 36.5 percent
of union leaders answered that members were less interested. Only 15.7
percent answered that members had became more interested, while 47.3
percent saw no change. Asked whether more members were now
participating in events and meetings organized by unions, only 13.1
percent answered yes. About 37 percent replied no and 49
percent indicated that there had been no change. Asked whether
their own union has succeeded in stopping the decline in interest
among its members, 13.3 percent of respondents said yes, while
65.5 percent said no. These figures show that a large portion
of Japan unions still suffer from a decline in the interest of their
membership.

Recently serious problems have arisen from the UI movement. Union
leaders are finding it difficult to make sufficient time available to
discuss and to plan long-term union policy because they have to spend
so much time maintaining their total welfare policies. Many unions are
now having to maintain programs that have been designed for members
and their families. It is easy to start such programs, but it has been
difficult to cull such programs. Now the number of such programs is
very large, and it takes a lot of time to manage them. Some unions
have begun to monitor their programs in an effort to determine which
ones deserve high priority. By culling their programs, union leaders
hope they will be able to spend more time in long-term planning.

6.0 The Future of Unions in Japan

The union movement in Japan faces a number of serious problems. One is
the decline in union density and rising apathy of members toward their
union's activities. In order to tackle this problem, many unions
have been conducting UI activities. The outcomes are still uncertain.

The fall of union density derives mainly from the inherent
shortcomings of enterprise unionism. Enterprise unions have in the
past concentrated their efforts on problems specific to the firm, and
have not devoted many resources to organizing non-unionized
workers. It neverthelessshould be noted that a few unions like Zensen
Domei (The Japanese Federation of Textile, Garment, Chemical,
Commercial, Food and Allied Industries Workers' Union) and Zenkin
Rengo (The Japan Federation of Metal Workers' Unions) have been
striving to organize new workers. But such unions are too few, and the
unionization rate in Japan will probably continue to fall.

Here it might be useful to consider the possibility of corporate
governance through union activity. Some unions have gained a
relatively strong position against management by actively engaging
management in joint consultations. It is sometimes difficult for
outside observers to evaluate ways in which trade unions have a say in
changing management policy, because the discussion in consultation
committees is kept confidential. However, interviews with union
leaders conducted by this author suggest that some unions have a voice
in decision-making and are able to ensure that management policies are
in the interest of their union's members.

In Japanese firms, unlike in U.S. firms, neither shareholders nor
outside directors have a strong voice. The function of checking
management policies was carried out by Japan's main banks until
the late 1970s, but since the mid-1980s their role has gradually
decreased. Consequently, chief executive officers in Japanese
companies have unchecked power to make decisions. The lack of
countervailing power poses a serious problem for corporate governance
in the event of managerial misconduct. Accordingly, unions might be
the last resort for checking top management policy-making. To the
extent that Japanese unions engage in this type of activity, we may be
witnessing the emergence of a new form of corporate governance.